Megatrends

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The Challenge to Develop New Opportunities for Tourism in Mexico

The 14th edition of theMexico National Tourism Forum was held in Mexico City on 22-23 February 2016, gathering tourism professionals in Mexico from both private and public institutions. After the extraordinary performance of thetourism industry recorded in 2014 and 2015, a critical hour has arrived, and it is time to establish the basis for defining the path that Mexico should follow for the next 10 years to increase inbound receipts more quickly than inbound flows.

Thenewchallenge for Mexico is to remain at “the top of the wave” by exploring new markets and using untapped resources to better spread Mexico’s tourism industry throughout the country and prevent losing arrivals to its closest competitors. I was able to witness the excitement for Mexico’s tourism industry and the interest of all kind of players in the industry, which raised many proposals, most of which focus on the profile of new travellers, the US Hispanic population as a potential market, and the importance of innovation in tourism services.

Rodolfo López Negrete, Head of the Consejo de Promoción Turística de México (Tourism Board of Mexico), speaks at theMexico National Tourism Forum

Source: Euromonitor International

The profile of new travelers

Continuing to draw high levels of tourists is dependent on Mexico’s ability to appeal to a wide range of traveler types. Salim Arkuch, general manager of Sabre in Mexico, shared an interesting current scope of the profile of millennials, who are considered a new group of travelers with new specific demands when it comes to services and needs from tourism players that Mexico’s tourism industry should be familiar with. In order to be competitive overall, hotels, airlines, restaurants and entertainment and attractions providers, as well as all other players, must offer some services to cover the basic needs of millennials, which, according to Arkuch, exhibit six characteristics:

They play by their own rules

They do not find loyalty plans as attractive as they are for older generations

They demand speed – WiFi is a must, not an option

They live with global trends, not only local trends

They see mobility as 100% relevant, as most business travelers carry at least two mobile devices

They choose brands based on personal beliefs, not by inheritance

Other speakers, such as Oscar Espinosa Villareal (former Minister of Tourism 1997-2000) and Pedro Niembro (Senior Director with ManattJones Global Strategies), focused on untapped markets, which can be very attractive and profitable with an appropriate offer of services and infrastructure. Medical tourism, retirees and pensioners are also a growing traveler group with a special profile and specific needs that tourism players in Mexico have to work on in order to be attractive to them.

The US Hispanic population as a potential market

To fully leverage the proximity with the US, the travel industry must turn to the Hispanic population living in the US, as they represent 20% of population in the country and the subset that is of Mexican heritage generates a GDP of over US$1 billion, which is comparable to the total GDP of Mexico, and an attractive market to increase inbound tourism receipts to Mexico.

It is estimated that the average household income among the Hispanic population in the US is about US$36,000, and a household spends approximately US$7,000 on leisure and entertainment activities. If we compare the average spend of inbound tourists in Mexico to this amount, it would represent an average of eight days of holidays in the country, a highly attractive opportunity for Mexico’s tourism industry, when considering that Hispanics spend 20% more on travel purchases than non-Hispanic Americans with a comparable annual income per household.

The efforts of the Mexican government through CPTM (Tourism Board of Mexico) are fully focused on strengthening the bond with the Hispanic population living in the US, by launching the first campaign to communicate with them and shift the perception of Mexico as a family destination to visit relatives into a leisure destination with a range of activities. The campaign, under the name #MiMexico, aims to trigger unique emotions in this target population to encourage them to vacation in Mexico.

Innovation as a tourism booster

The industry of tourism in Mexico represents 8% of Mexico’s GDP, and is considered one of the main industries with the strongest potential to continue growing in the years to come. The recent decline of the Mexican peso against the US dollar along with the fall in oil prices has led to speculation about the future performance of the Mexican economy, heightening the importance of inbound tourism in 2016.

Speakers at the Forum agreed that a key driver to boost tourism in Mexico is innovation to convert weaknesses into strengths, such as taking advantage of the increase in the exchange rate of the Mexican peso against the US dollar and the euro, and show the world’s travelers the range of options they could find in Mexico and motivate them to have longer stays. Innovation can be implemented through the development of new destinations besides Cancún and Los Cabos, such as Mazatlán, Oaxaca or Chihuahua, to mention just a few, developing more events or attractions in the current main destinations, such as major events or thematic parks to create new experiences that encourage repeat visits, the inclusion of technology in museums and tourism sign systems, right up to the development of a national marketing and promotion strategy in order to attract new travelers. Some of these ideas were mentioned by Enrique de la Madrid Cordero, Ministry of Tourism, and Rodolfo López Negrete, Head of Consejo de Promoción Turística de México (Tourism Board of Mexico), among other important speakers.

In the interests of the proposals being truly innovative, private industry and tourism associations of hotels, tourism development and travel agencies also asked the government to include them in a “collective work” to define future plans and actions, a strategy that has worked well for the US tourism industry. Companies and associations expressed an interest in particular in having working sessions to present their proposals and their needs, before the government allocates thetourism budget and designs the national tourism strategy.

Innovations like these in thetourism industry will also support the above goals of needing to appeal to millennial travellers and Hispanic travellers living in the US by making efforts to know them better and improving facilities and infrastructure to make their visits better.